- By Fiona Hnatow, Chief People Officer at the University of Portsmouth.
In an era of mounting financial pressures across the UK higher education sector, the University of Portsmouth has not been immune to these difficulties. However, through considered efficiency programmes and an innovative approach to pension reform, we are emerging from the initial financial pressures into a stronger and sustainable position. As one of the largest Post-92 institutions in the UK, the University plays a vital role in the local and national economy. With nearly 4,000 staff and 29,000 students, 6,000 of whom are international, the University is not only a major employer in the Solent region but also a hub of innovation, research and global engagement.
In 2024 alone, the University contributed an impressive £1.4 billion to the UK economy, including £658 million in the Solent region and £505 million in Portsmouth, supporting over 8,800 jobs locally. These figures underscore the University’s critical role in regional development and its broader impact on the national landscape.
By early 2023, it became increasingly clear that the UK higher education sector was heading towards a financial crisis. A combination of declining undergraduate and international student applications, rising utility and employment costs and inflexible pension obligations created a perfect storm, particularly for Post-92 universities.
One of the most significant financial burdens facing these institutions is the Teachers’ Pension Scheme (TPS). Mandated by the Further and Higher Education Act 1992, Post-92 universities are required to offer TPS to all academic staff, with no option to opt out. In contrast, non-Post-92 institutions can offer alternative schemes, such as the Universities Superannuation Scheme (USS), which carry significantly lower employer contribution rates.
As of April 2025, TPS employer contributions rose from 23.68% to 28.68%. This means that employing an academic on a £50,000 salary now costs Post-92 institutions nearly £9,000 more per year than their competitors. With further increases projected in 2026, the financial strain is only expected to intensify.
The Reset Programme: A Strategic Pivot
Recognising the urgency of the situation, the University of Portsmouth launched its ‘Reset’ programme in early 2023. This comprehensive initiative was designed to reduce both staff and non-staff costs, streamline operations and build a digitally enabled, efficient institution. The goal: to ensure both operational and financial sustainability in the face of unprecedented challenges.
The Reset programme introduced a series of targeted workstreams over an 18-month period, including:
- Creation of a staffing subsidiary (UASL) to employ new staff under a more affordable pension scheme.
- Voluntary Severance Scheme to reduce the need for compulsory redundancies.
- Enhanced vacancy management, filling only business-critical roles.
- Non-pay budget reductions, including cuts to travel, training, printing, and consumables.
- Removal of budget contingencies during annual planning.
- Policy changes to limit professional accreditation and subscription costs.
- Professional services reviews to centralise functions and reduce staffing levels.
- Academic restructuring, including faculty mergers and rebalancing student/staff ratios.
- Contracted services reviews to improve value for money.
- Student retention initiatives to reduce withdrawals and protect tuition income.
UASL: A Bold and Necessary Innovation
In August 2024, the University launched University of Portsmouth Academic Services Limited (UASL), a wholly owned subsidiary created to employ new academic and professional services staff. While maintaining existing terms and conditions, UASL introduced a new Defined Contribution (DC) pension scheme through Aviva, offering a 12% employer contribution for permanent staff and 6% for casual staff. Additionally, the National Employment Savings Trust (NEST) scheme was introduced for casual workers, primarily students.
This move was not taken lightly as the University recognises how important pensions are to attract and retain staff. However, it was essential to avoid the unsustainable costs associated with TPS and the Local Government Pension Scheme (LGPS). Importantly, all staff employed before August 2024 retained their existing pension arrangements, helping to maintain strong relationships with unions such as UCU and Unison.
The TPS, and its statutory imposition on Post-92 providers, is a throwback to when institutions like the University of Portsmouth, as former polytechnics, were administered by their local authority. At the time, it made sense. But in the thirty years since we achieved full University status, it has become impossible to justify the retention of this outdated system. It is clear that those bodies responsible for setting and monitoring higher education funding, who are admittedly not known for their responsiveness, have failed to adapt to the realities of the higher education landscape. When vast swathes of the sector are faced with a worsening financial position, many of those being post-92 institutions, it is baffling that this outdated system remains to hinder determined efforts to manage institutional finances.
The results have been significant. In 2024/25 alone, the University is on track to save over £1 million, with projected savings rising to £2.8 million in 2025/26 and £4.4 million in 2026/27. Moreover, the new pension schemes have proven attractive, particularly to early-career professionals, international staff, and those on lower salaries—groups that had previously opted out of TPS due to affordability concerns.
Balancing Innovation with Risk
While the creation of UASL has delivered substantial financial benefits, it has also introduced new challenges. Notably, Research England and UKRI have begun placing restrictions on the eligibility of subsidiary-employed academics for research funding and participation in the Research Excellence Framework (REF). This poses a significant risk to the University’s research ambitions and its ability to compete on a national and global scale.
Despite these concerns, the University had to weigh the risks of innovation against the very real threat of insolvency. Without decisive action, the financial outlook would have been dire. In 2023/24, the University had budgeted for an income of £321 million but achieved only £304 million, resulting in a £9.2 million deficit—despite achieving £19.7 million in Resetsavings. For 2024/25, the budgeted income is £290.5 million, with a projected deficit of £2.9 million, inclusive of £24 million in planned savings.
A Call for Sector-Wide Reform
The University of Portsmouth’s experience is not unique. Many Post-92 institutions across the UK are being forced to consider similar measures, simply to remain viable. In Scotland, the government has stepped in to support institutions facing equivalent pension cost increases, highlighting the uneven playing field across the UK.
The University is now calling on the Department for Education and the UK Treasury to reform elements of the Further and Higher Education Act 1992 that tie Universities to an outdated, restrictive and overly costly pension scheme and advocates for greater flexibility in pension arrangements. Such reform would allow institutions to manage their finances more effectively, attract and retain top talent, and avoid widespread job losses and regional economic disruption. Our view is that it is wholly unfair that the Government have subsidised schools and further education colleges in England to compensate for the rising cost of TPS, yet Higher Education Institutions have not.
Conclusion: Leading Through Change
The University of Portsmouth has demonstrated that with strategic foresight, bold decision-making, and a commitment to collaboration, it is possible to navigate even the most challenging financial landscapes. However, we continue to advocate that reform is urgently needed for the good of the sector as a whole, to ensure long-term sustainability.
State schools and FE colleges are public bodies – all Us are private corporations.
No case for the taxpayer subsidising TPS in the post-92s now it is at almost 30% employer contributions; just as the taxpayer did not pick up the tab when USS was almost at that level (now at c16%).
The ‘new’ Us need legislative freedom to exit the very costly TPS DB scheme and either go for USS or DC schemes (bearing in mind USS is now a hybrid DB/DC scheme).
A similar situation in the independent schools as they exit an unaffordable TPS.
If the pension changes only accounted for approx 5-10% of the Reset savings, where did the bulk of the remainder come from?
Some of the interventions mentioned seem quite difficult to measure in terms of their financial benefit, e.g. how much money does merging faculties save if you still have the same volume of workload from the same number of students? How much does it cost to carry out the merger?